With your qualifications sorted and a bit of experience under your belt working for someone else’s HVAC business, you’re now ready to become a business owner yourself. Starting an HVAC business makes a lot of sense too. Owning a trade business provides:
- Stable income.
- The ability to be the boss.
- The chance to get experience as both a business owner and an HVAC technician (if you want to stay on the tools).
But that begs the question of how to start an HVAC business and what to do first?
This comprehensive guide will show you the ins and outs of starting an HVAC business. Check out the chapter summary below and navigate to a section you’d like to know more about. Or skip to the first section as we break down what defines an HVAC business and what kinds of roles an HVAC business can fill in the trades sector.
What is an HVAC business exactly?
Unlike other core trades such as plumbing and electrical, HVAC is a blanket term for technicians who provide heating, cooling, ventilation, and refrigeration services to clients across various sectors.
You’ll find an HVAC business behind every good fit-out related to temperature regulation and airflow, from domestic air conditioning to hospital air purification. HVAC professionals operate across many different business structures, from sole trader technicians picking up regular contract work to partnerships and companies providing freestanding HVAC services to clients in residential, domestic, and industrial markets.
How do you start an HVAC business?
Starting an HVAC business is like any other trade business; you’ll need to register an ABN, come up with an HVAC business name and get a business plan on paper, but we’ll get to all of that later in this guide.
Instead, it’s best to begin your trade business ownership journey with a single question.
Are you starting fresh or buying in?
Starting an HVAC business from scratch sounds tempting, and the reality for many trade professionals is that half the fun of owning an HVAC business is building it from the ground up.
However, if you’re not sentimental, don’t want to create a HVAC business plan, and just want to start, you could consider purchasing an existing business. If you’re after an HVAC business for sale, Australia is a land of opportunity. With such a profitable trades sector, there are many already successful businesses whose owners are looking to move on or finish up in the industry and retire. If this sounds like a great idea, we thoroughly recommend asking around and seeing if there are any HVAC businesses for sale before you commit to founding one.
If you’re determined to start one from scratch, we’ll cover the costs of starting a new HVAC business in the next section.
How much does it cost to start a new HVAC business?
We’d love to give you an actual HVAC business start-up cost. But, the reality of what you’ll need to spend to own HVAC business infrastructure will depend on the capital you already have and what you need to acquire before you open your doors and start doing business. If you’re a fully qualified HVAC professional, you’ll likely already have tools, valid licences, and even a work vehicle. You’ll also need to factor in costs like rent, utilities, advertising and even website hosting, alongside staff costs, if you decide to hire before opening your business.
If you’re struggling to settle on an HVAC business start-up cost, we recommend enlisting the help of a finance professional or accountant. You’ll likely need one down the line anyway to assist with your operational finances, and now is a great time to shake a few hands and get some advice.
HVAC business start-up cost list:
- Valid licences & qualifications
- A work vehicle/truck
- Rent
- Utilities
- Advertising
- Marketing
- Website design
- Website hosting
- Staff wages
- Materials
How much can you make owning your own HVAC business?
You’re probably wondering how much HVAC business owners make and whether it’s enough to cover all the HVAC business start-up costs we outlined in the previous section.
Trade business profitability is an imprecise science, and we’d be doing you a disservice if we offered even a ballpark figure. We can provide you with this great resource that outlines the average salary for an HVAC professional in Australia. You can cross-reference this data with this salary index and factor it up slightly, as you won’t need to pay a portion of your profits to the business owner (you’re the boss, after all).
Is owning an HVAC business even profitable?
If you do the math on the average HVAC business start-up cost and the other costs that come after opening your doors, you might think that running an HVAC business isn’t as profitable as it initially appeared to be. Ignore those thoughts! Starting an HVAC business is temporary pain for long term gain, and we’re going to tell you why.
Firstly, there’s no boss to skim the top off your profits. You’re the boss, and nobody is taking a cut of your hard work without your say so. Secondly, your profitability is entirely in your hands. No incompetent managers and no business owners who don’t listen to what you have to say. You steer the ship, and you decide how much work you take on and what it’s going to take to create a successful HVAC business.
How to start a successful HVAC business
Create a business plan
Every HVAC business, regardless of its size or scope, needs a plan of action, and we call this document an HVAC business plan. It’s a blueprint for your success as an HVAC business owner. It contains all the information, data, statistics, and research you need to get your business off the ground and keep it progressing towards your business goals. It doesn’t matter whether it’s a one-page document or a 100-page manual. As long as it’s comprehensive and built to the specifics of your business, it’ll work.
If you plan to hire staff and expand your business down the track, your business plan will also help provide structure to your employee’s roles and help you succeed as a people manager.
Make sure your business plan includes at a minimum:
- An overview of your industry
- A financial projection
- A list of your overall business goals
- An analysis of your market
- A list of the products and services you will offer
- A strategy for pricing
- A sales and marketing strategy
We’ll break down and discuss a few of the components that make up your HVAC business plan in more detail below.
Industry overview
An industry overview serves two purposes. Firstly, it gives you a broad overview of the HVAC industry. Secondly, it fills in knowledge gaps and helps you understand the small details about your industry that you otherwise might miss. You’ll probably find out more than any certified HVAC technician ever wanted to know about the HVAC industry, and that’s a good thing.
If you’re looking for some primary areas to focus on, though, we recommend researching your major competitors, any current industry trends, financial forecasts, and overall sector profitability to get started. You can also document where you believe your plumbing business will find its home in the industry and the types of competitors you expect to come up against when you eventually open your HVAC business. Remember that every little bit of information helps, and the more thorough your industry overview is, the easier it will be to create strategies that help your business succeed within the industry.
Financial projection
A financial projection lays out how you’re going to fund your HVAC business and how much you need to make to break even and keep your business in the black. Creating a financial projection can be a complex process, and we recommend getting some professional help from an accountant, bookkeeper, or financial expert if your initial numbers don’t add up.
Take time to ensure that your financial projection is thorough and plans for all possible future outcomes. Nobody wants to reach a roadblock down the track and not have the financial resources to cover it, and you’ll thank yourself for doing the work now if you ever reach that point later.
Business goals
With your finances squared away, it’s time to build some goals and aspirations for your business within the confines of what your budget and future profitability will allow. To create a profitable HVAC business, your business goals will need to hit several key criteria to be effective. This sounds easy on paper, but can be a bit challenging when you’re rushing to complete an entire set of goals while also juggling all the other demands of starting an HVAC business.
To make creating your business goals a lot easier, we recommend using the SMART principle. After creating a business goal, ask yourself whether it’s:
- Specific – Can the goal be explained in a few sentences or less?
- Measurable – Is it easy to evaluate the success of each goal?
- Attainable – Can the goals realistically be achieved in the time allotted?
- Realistic – Can the goals be achieved without relying on good luck?
- Timely – Is there a clearly defined timeline for each goal, and are they reachable?
Market analysis
Like an industry overview, a market analysis focuses on local HVAC trends and competition instead. We recommend splitting your market analysis into two distinct stages, surveying and documenting. Surveying is when you go out into the field and find out everything you can about your local customer base, your competitors, how they interact and any other details you need to understand the market your HVAC business will exist within. Documenting is when you take this newfound knowledge and turn it into actionable plans that will help you compete in the market and hopefully exceed the success of your competition over time.
We’ll take this opportunity to note how important it is to have good information gathering tactics when you’re looking to start an HVAC business. Even the tiniest bit of intel can be invaluable when you’re a freestanding trade business owner who must make decisions now, not later. Always keep your ear to the ground and keep up with local news about the HVAC industry. It could help you formulate your next big success plan.
Products & services
It sounds like a no brainer but creating a document that lists out all your products and services is a crucial step on your way to starting your HVAC business. Here’s a quick five-point guide for creating a product and service list:
- Write down all the products and/or services your business will offer
- Compare the list with your inventory lists to check for accuracy
- Add a price to every product and/or service on the list (we’ll cover this in the next section)
- Add your products/services to specific categories for easier admin
- Proofread your list for mistakes and then move on to creating a pricing strategy
Pricing strategy
With a product and service list in hand, it’s time to talk about what you need to charge to keep your business comfortably in the black. It’s crucial to calculate exactly how much it costs to produce and deliver each of your products and/or services before setting prices. Factor in material costs, labour, GST, and storage, then arrive at a final price that fully accounts for your expenses and allows you to turn an agreeable profit.
But wait, you’re not done yet! Part of starting an HVAC business that’s destined for success is putting in place the infrastructure that will allow you to scale this success into the future. Having a set of pricing objectives will help you achieve this by ensuring that you can scale up your pricing with the proper knowledge of how much is too much and too little.
Never forget that making a profit is your ultimate goal, but your customers have a limit on what they’ll be willing to spend on an HVAC professional, so finding a happy medium is essential.
Sales & marketing strategy
Almost important as what you sell is how you sell it. You’ll need both a sales strategy and a marketing strategy before starting an HVAC business. There’s one primary reason for this; your successful competitors will have one too, and you need to compete.
We’ll break each down in a separate section below:
Sales Strategy
Selling your products and services in an open market comes with risks, and a sales strategy aims to eliminate as many of those risks as possible. Your role as an HVAC professional is to provide customers with a great experience and great work but getting them through the door is the first big hurdle.
Typically, a sales strategy comprises three main parts, which we’ll outline below:
- A set of goals – Your HVAC sales goals can include anything from meeting specific sales targets to locking in a certain amount of recurring maintenance over a set period. Make sure your sales goals align with your overall HVAC business goal; this helps keep everything uniform and prevents confusion over which goals apply to which parts of your business.
- A set of actions – You’ll need to rough out the steps you’ll take to reach your sales goals. Make sure your actions are achievable, straightforward, and, most importantly, clear. Clarity is the most important of the three, as you may need to hand off your sales strategy to an employee down the track, and the clearer it is, the less you’ll have to explain.
- A set of decisions – You won’t always be able to balance the needs of your goals with the intent of your actions. Adjusting on the fly is part of starting an HVAC business, and roughing out the decisions you’ll make will help maintain clarity and eliminate second-guessing
Marketing Strategy
A marketing strategy packs in all the details about how you plan to tackle your market and what image you want to craft around the business that entices potential customers to do business with you instead of your competitors.
It can be a single page document or a comprehensive plan. You’ll need to understand what the driving forces of your market sector are, what influences them, and how you can tailor your products, services, and advertising to better fit your customers’ needs with this information in mind. Understanding local trends will also help you craft a more robust marketing strategy, so don’t forget to survey what’s changing in the industry around you before filing your marketing strategy away with your other HVAC business documents.
Six things you need to do before starting an HVAC business
Use technology to your advantage
As an HVAC business owner, you’ll be overseeing the installation and maintenance of cutting-edge tech, so it’s only natural that your HVAC business solutions should be equally as sophisticated. A digital accounting package like Xero or Reckon is essential for an HVAC business. But you can take your tech even further if dominating your market with digital operations is what you seek.
Top on your list of HVAC business solutions should be job management software like AroFlo. Our software helps eliminate paperwork, cut job handling times in half and automate the parts of your HVAC business that don’t require your direct attention, like timesheets, invoicing and scheduling.
You can also look at similar HVAC business solutions tailored to smaller businesses if you aren’t planning to expand. Still, we highly recommend having a basic job management platform set up and ready to go before starting an HVAC business.
Sort your licences and permits
If you’re just finishing up your apprenticeship, you’ll need to get all your licences and trade permits sorted before starting an HVAC business. You’ll also need to register your business and get an ABN. If you’re unsure how to do this, click this link to find out more.
Shortlist some HVAC business names
As you move through the process of starting your HVAC business, make sure to think about what you want to call it. A name is everything, and it needs to be unique in your local market. After all, nobody wants to Google “A-Z HVAC Services” and find three businesses with the same name in their area.
Make it memorable, something that sticks in the mind long after your work truck has passed a potential customer in traffic or on the street. It helps to keep a list of possible HVAC business names as you progress towards opening your HVAC business, and you’ll have a shortlist of great names to pick from when it finally comes time to choose.
Focus on customer service
Modern customers have very little time for inefficient services and even less patience when your service fails to meet their expectations in its implementation. Part of HVAC business management is managing how your company interacts with its customers and hopefully keeps them coming back time and time again. Your role as the owner is tied directly to how the business presents itself to these customers, and that’s why being a great manager is so important to the success of your HVAC business.
Customers come first in any situation, and refusing to adopt this mindset has been the undoing of many trade businesses that have come before yours. Always look for ways to improve customer experiences and generate more positive interactions between your business and your clients; it’s an HVAC business management strategy that pays dividends time and time again. If you’re unsure what you could be doing to better serve your customer’s needs, ask them. Feedback, reviews, and testimonials are invaluable for gauging how well your business meets customer needs. You should never be afraid to leverage customer opinion when you’re unsure whether your business meets and exceeds customer needs.
Improve scheduling and efficiency
Tied directly to customer service is another crucial practice in HVAC business management, scheduling, and efficiency. As the old saying goes, “proper preparation prevents poor performance”, and as an HVAC business owner, you need to live this methodology rather than simply quote it. Complete transparency across your scheduling systems is necessary for ensuring you and your team arrive on time and ready to solve your client’s HVAC related issues. Once you’re on-site, the efficiency of your operation will decide how quickly you can clear a job and move on to the next without sacrificing the quality of service along the way. After a while, you’ll fall into a cycle where scheduling, efficiency and customer service all join together to create an HVAC business management system unique to you and your business. Our advice is don’t rush the process. Instead, always be on the lookout for ways to make your HVAC business run smoother. Over time, your systems and processes will fall into place naturally due to good management and good governance.
That’s all there is to it!
You’ve made it through our guide on how to start an HVAC business, and the only step left is to get out there and begin your journey. The last piece of advice we can give you is to enjoy the process of growing from certified HVAC technician to business owner. Being the boss and deciding a company’s future is an amazing feeling. Just make sure you’re always looking for ways to grow your success, and the rest is just hard work and dedication.
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